Management: A Practical Introduction; 7th edition Chapter 5, (Kinicki) Chapter 6: Strategic Management: How Exceptional Managers Realize a Grand Design, (Kinicki) Chapter 7: Individual and Group Decision Making, chapter 8, organizational culture, kin…

Setting goals and deciding how to achieve them.
Business Model
Outlines the need the firm will fill, the operations of the business, its components and functions and, the expected revenues and expenses
A large-scale action plan that sets the direction for an organization
Strategic Management
A process that involves managers from all parts of the organization in the formation and the implementation of strategies and strategic goals
A company’s purpose or reason for being
Mission Statement
Expresses the purpose of an organization
A long-term goal describing “what” an organization wants to become. It is a clear sense of future and the actions needed to get there
Vision Statement
Expresses what the organization should become, where it wants to go strategically
Strategic Planning
Determine what the organization’s long-term goals should be for the next 1-5 years with the resources they expect to have available
Tactical Planning
Determining what contributions their departments or similar work units can make with their given resources during the next 6-24 months
Operational Planning
Determining how to accomplish specific tasks with available resources within the next 1-52 weeks
Goal (Objective)
A specific commitment to achieve a measurable result within a stated period of time
A conceptual tool arranging strategic goals, tactical goals and operational goals
Strategic Goals
Goals that are set by and for top management and focus on objectives for the organization as a whole
Tactical Goals
Goals that are set by and for middle managers and focus on the actions needed to achieve strategic goals
Operational Goals
Goals that are set by and for first-time managers and are concerned with short term matters associated with realizing tactical goals
Action Plan
Defines the course of action needed to achieve the stated goal
Operating Plan
Designed for a one-year period, defines how you will conduct your business based on the action plan; it identifies clear targets such as revenues, cash flows, and market share
Standing plans
Plans developed for activities that occur repeatedly over a period of time
A standing plan that outlines the general responses to a designated problem or situation
A standing plan that outlines the response to particular problems or circumstances
A standing plan that designates specific required action
Single-Use Plans
Plans developed for activities that are not likely to be repeated in the future
A single-use plan encompassing a range of projects and activities
A single-use plan of less scope and complexity than a program
SMART goal
One that is Specific, Measurable, Attainable, Results-oriented, and has Target dates
Management by Objectives (MBO)
A four-step process in which (1) managers and employees jointly set objectives for the employee, (2) managers develop action plans, (3) mangers and employees periodically review the employee’s performance and (4) the manager makes a performance appraisal and rewards the employee according to results
Planning/Controlling Cycle
A feedback loop that goes as follows; (1) Make the plan (2) Carry out the plan (3) Control the direction by comparing results with the plan (4) Control the direction by taking corrective action in two ways- namely (a) by correcting deviations in the plan being carried out or (b) by improving future plans
Business Plan:
A document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success.
A large-scale action play that sets the direction for an organization.
Strategic Management:
A process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals.
(1) provide direction and momentum,
(2) encourage new ideas, and above all
(3) develop a sustainable competitive advantage.
Three reasons why organizations should adopt strategic management and strategic planning:
Sustainable competitive advantage occurs when an organization can stay ahead in four areas:
(1) Being responsive to customers, (2) Innovating, (3) Quality, and (4) Effectiveness.
Michael Porter:
Harvard Business School professor who is said to be “the single most important strategist working today, and maybe of all time,” by Kevin Coyne of consulting firm McKinsey & Co.
Strategic Positioning:
Attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company.
(1) Strategy is the creation of a unique & valuable product,
(2) Strategy requires trade-offs in competing, and
(3) Strategy involves creating a “fit” among activities.
Three key principles underlying Strategic Positioning:
1. Establish the mission and the vision.
2. Establish the grand strategy with environmental scanning.
3. Formulate the strategic plans.
4. Carry out the strategic plans.
5. Maintain strategic control.
The 5 steps of the Strategic-Management Process:
Grand Strategy:
explains how the organization’s mission is to be accomplished. examples- growth, stability, and defensive.
Growth Strategy:
A grand strategy that involves expansion–as in sales revenues, market share, number of employees, or number of customers or (for nonprofit) clients served.
Stability Strategy:
A grand strategy that involves little or no significant change.
Defensive Strategy (AKA Retrenchment Strategy):
A grand strategy that involves reduction in the organization’s efforts.
Strategy Formulation:
The process of choosing among different strategies and altering them to best fit the organization’s needs.
Strategy Implementation:
Putting strategic plans into effect
Strategic Control:
Consists of monitoring the execution of strategy and making adjustments, if necessary.
to keep a strategic plan on track
(1) Engage people, (2) Keep it simple, (3) Stay focused, and (4) Keep moving.
Competitive Intelligence:
Gaining information about one’s competitors’ activities so that you can anticipate their moves and react appropriately.
Environmental Scanning:
Careful monitoring of an organization’s internal and external environments to detect early signs of opportunities and threats that may influence the firm’s plans.
SWOT Analysis (AKA Situational Analysis):
A search for the (S)trengths, (W)eaknesses, (O)pportunities, and (T)hreats affecting the organization.
Organizational Strengths:
The skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission.
Organizational Weaknesses:
The drawbacks that hinder an organization in executing strategies in pursuit of its mission.
Organizational Opportunities:
Environmental factors that the organization may exploit for competitive advantage.
Organizational Threats:
Environmental factors that hinder an organization’s achieving a competitive advantage.
A vision or projection of the future.
Trend Analysis:
A hypothetical extension of a past series of events into the future.
Contingency Planning (AKA Scenario Planning & Scenario Analysis):
The creation of alternative hypothetical but equally likely future conditions.
Porter’s Model for Industry Analysis:
Suggests that business-level strategies originate in five primary competitive forces in the firm’s environment: (1) Threats of New Entrants, (2) Bargaining Power of Suppliers, (3) Bargaining Power of Buyers, (4) Threats of Substitute Products or Services, and (5) Rivalry Among Competitors.
Porter’s Four Competitive Strategies:
(1) Cost-Leadership, (2) Differentiation, (3) Cost-Focus, and (4) Focused-Differentiation.
Cost-Leadership Strategy:
To keep costs, and hence prices, of a product or service below those of competitors and to target a wide market.
Differentiation Strategy:
To offer products or services that are of unique and superior value compared with those of competitors but to target a wide market.
Cost-Focus Strategy:
To keep the costs, and hence prices, of a product or service below those of competitors and to target a narrow market.
Focused-Differentiation Strategy:
To offer products or services that are of unique and superior value compared to those of competitors and to target a narrow market.
Single-Product Strategy:
A company makes and sells only one product within its market.
The benefit of a Single-Product Strategy:
The risk of a Single-Product Strategy:
Operating several businesses in order to spread the risk.
Unrelated Diversification:
Operating several businesses under one ownership that are not related to one another.
Related Diversification:
An organization under one ownership operates separate businesses that are related to one another.
The economic value of separate, related businesses under one ownership and management is greater together than the businesses are separately.
BCG Matrix:
A means of evaluating strategic business units on the basis of (1) their business growth rates and (2) their share of the market.
Have high growth rate, high market share–definite keepers.
Question Marks:
Risky new ventures–some will become stars, some dogs.
Cash Cows:
Have slow growth but high market share–income finances stars and question marks.
Have low growth, low market share–should be gotten rid of.
Consists of using questioning, analysis, and follow-through to mesh strategy with reality, align people with goals, and achieve results promised.
The three core processes of business:
People, Strategy, and Operations.
The first core process–People:
Consider who will benefit you in the future.
The second core process–Strategy:
Consider how success will be accomplished.
The third core process–Operations:
Consider what path will be followed.
Know your people & your business.
Insist on realism.
Set clear goals & priorities.
Follow through.
Reward the doers.
Expand the capabilities.
Know yourself.
Steps to building a foundation of execution:
choice made from among available alternatives
Decision making
process of identifying and choosing alternative courses of action
System 1 and 2
Two Systems of Decision Making (Daniel Kahneman-winner of 2002 Nobel Prize in Economics)
System 1
intuitive and largely unconscious: operates automatically and quickly; our fast automatic intuitive and largely unconscious mode, as when we detect hostility in a voice or detect that one object is more distant than another
System 2
analytical and conscious (slow); filling out a tax form or parking car in narrow space; lazy and tires easily
Curse of Knowledge
as our knowledge and expertise grow= less able to see things from an outsider’s perspective
Rational Model of Decision Making (classical model)
how managers SHOULD make decisions; logical decisions that will further organization’s best interest
1. identify the problem
2. think of alternative solutions
3. evaluate alternative and select solution
4. implement solution chosen
4 Steps of Rational Decision Making (logical and optimal)
Stage 1: Identify the Problem- Actual vs. Desirable
customer complaints, supplier breakdown, staff turnover, etc
difficulties that inhibit the achievement of goals
situations that present possibilities for exceeding existing goals
Farsighted managers
look past daily problems and seize the moment to actually do better than what is expected
analyzing the causes
Step 2: Alternative solutions: Obvious & Creative
employers greatest competitive resource? creative employees
Step 3: Evaluate Alternative and Select Solution
Evaluate alternative at cost and quality but also at “is it ethical, feasible, effective”
1. plan carefully
2. be sensitive to those affected
(why it helps to give employees and customers attitude
For implementation to be successful two things:
things happen that you didn’t expect
Law of Unintended Consequences
1. give it more time
(allow enough time for adaptability)
2. change it slightly
3. Another alternative
4. start over
If the action is not working? (4)
-doesn’t describe how managers actually make decisions
-assumptions: complete information, no uncertainty, logical unemotional analysis, and best decision for organization
What is wrong with the rational model?
it is prescriptive, describing how managers ought to make decisions rather than how they actually make decisions
Non-Rational Decision Making
Satisficing and Intuition
Two models of NonRational Decision Making
bounded rationality
ability of decision makers to be rational is limited by numerous constraints
Satisficing Model
Satisfactory is good enough; seek alternative until they find one that satisfies, but it not optimal
Intuition Model
making a choice without the use of conscious thought; holistic hunch- intuition that comes from expertise & automated experience that is based on feelings; good for start up
speeds up decision making and resources are limited
Two Benefits of the Intuition Model
Drawback of the Intuition Model
difficult to convince others that your hunch makes sense
Ethics Officer
someone trained about matters of ethics in the workplace, ethical dilemma
Greatest pressure on top executives
maximize shareholder value; follow individual ideas about right and wrong
Decision Tree
graph of decisions and their possible consequences; used to create a plan to reach a goal
Evidence based management (trump competition)
best evidence—> organizational practice
Purest application of E.B.M is the use of
sophisticated forms of business data analysis
risk of various stocks
Time Series Forecast
future data based on historical data
Thomas H. Davenport
3 Attributes Among Analytics Competitors: 1. Use of modeling 2. Having multiple applications, not just one 3. Support from the Top
Predictive Modeling
predict future behavior and anticipate the consequences of change
Big Data
includes not only data in corporate databases, but also web browsing data trails, social network communication, sensor data, and surveillance data
Big Data Analysis
process of examining large amounts of data
1. Relaxed Avoidance
2. Relaxed Change
3. Defensive Avoidance
4. Panic
How do individuals respond to a decision situation? (ineffective)
Relaxed Avoidance
“nothing bad is going to happen to me”; take no action in the belief that there will be no negative consequences

Form of complacency: don’t see or disregard signs of danger

Relaxed Change
“easy way out”; complete inaction will have negative consequences but opts for the first available alternative lowers that risk

form of satisficing

Defensive Avoidance
“no reason to explore other options”; can’t find a good solution and follows by procrastinating, passing the buck “let George do it”, and denying any risk of any consequences
frantic to get rid of the problem that can’t deal with problem realistically; occurs in crisis situations
1. Importance- determine how much priority to give the decision situation
2. Credibility- how much is known about possible threat
3. Urgency
Three Effective Reactions:
Deciding to decide
agrees that a decision about a problem is to be made and take effective decision making steps
strategies that simplify the process of making decisions
Availability Bias
managers use readily available from memory to make judgments
Representativeness Bias
tendency to generalize from a small sample or single event
Confirmation Bias
when people seek info to support their point of view and discount data that doesn’t
Sunk Cost Bias
when managers add up all the money already spent on a project and conclude it is too costly to simply abandon it
Anchoring and Adjustment Bias
making decisions based on an initial figure
Over compliance Bias
people’s subjective confidence in their decision making is greater than their objective accuracy
Hindsight Bias
view events as being more predictable than they really are
Framing Bias
influence by the way a situation or problem is presented to them
Escalation of Commitment Bias
increase their commitment to a project despite negative info about it
Advantages of Group Decision Making
greater pool of knowledge, different perspectives, intellectual stimulation, better understanding of decision rationale, and deeper commitment to the decision

(has to be made up of diverse participants)

Disadvantages of Group Decision Making
few people dominate or intimidate, groupthink, and goal displacement
group members strive to agree for the sake of unanimity and avoid assessing the decision situation
Goal Displacement
primary goal is subsumed by secondary goal
Less Efficient
groups take longer, groups use less information and fewer communication channels
size affects decision quality
lager group=lower quality of decision; odd number is better
they agree and disagree freely and safely= minority dissent (increase innovation within groups)
Group decision is more effective when
Knowledge counts
familiar people= make better decisions
Reach a consensus
express opinions and reach agreement to support final decision
technique used to help groups generate multiple ideas and alternatives for solving problems
Electronic Brainstorming
come together over computer network
The Delphi Technique
a group process that uses physically dispersed experts who fill out questionnaires to anonymously generate ideas; face to face judgements are impractical; practical= conflicts likely to impair communications
Computer Aided Decision Making
reduce roadblocks to group consensus; decision support system- flexible tool for analysis and helps managers focus on the future
strategy (228)
the large scale action plan that affect the organizations vision and are used to set the firm’s direction
politics (228)
the different behavioral and psychological characteristics of a particular office means learning to understand the organization’s culture
organizational culture or (228)
corporate culture
a system of shared beliefs and values that develop in an organization and guides the behavior of its members it is the “social glue”, or the personality of the firm
organizational structure (229)
a formal system of task and reporting relationships that coordinates and motivate an organizations members so that they can work together to achieve the firm’s goals, there must be consistency among all 6 elements, vision,strategy,culture, structure and internal practices, collective attitudes and behaviors, achievement of goals
types of organizational culture (229)
clan culture (229)
has an internal focus and values flexibility rather then stability and control, like a family style operation, devote resources to hiring and developing their employees, they view costumers as partners
adhocracy culture (230)
has an external focus and values flexibility, attempts to create innovative products by being adaptable, creative and quick to respond to change in the marketplace, well suited for startup companies, industries undergoing a constant change, mature companies that need innovation to enhance growth
market culture (230)
a strong external focus and values stability and control, driven by competition,costumers, productivity and profits take precedence over employee development and satisfaction
hierarchy (230)
has an internal focus, values stability and control over flexibility, these companies will likely have formalized structured work environments aimed at achieving effectiveness through a verity of control mechanisms they measure efficiency, timeliness, reliability in the creation and delivery of products
three levels of organizational culture (231)
observable artifacts, espoused values, basic assumptions
espoused values (231)
the explicitly stated values and norms preferred by an organization, may be put forth by the founder or top managers
enacted values (231)
the values and norms that are actually exhibited in the company
core values (231)
basic assumptions that are not observable, represent the core beliefs that employees hold about the company
symbol (232)
an object, act, quality, or event,that conveys meaning to others
stories (232)
a narrative based on true events which is repeated and can be embellished to emphasize a point, it is an oral history
hero (232)
is a person whose accomplishments embody the values of the organization
rites and rituals (232)
are the activities and ceremonies, planed and unplanned that celebrate important occasions and accomplishments in the firm’s life
functions of organizational culture (233)
it gives members of the firm identity
it facilitates collective commitment
it promotes social system stability it shapes behavior
strength perspective (234)
assumes that the strength of a corporate culture is related to its long term financial performance, in a “strong” culture employees adhere to the values because they believe in its purpose, a week culture employees are forced to adhere to values through extensive procedures and bureaucracies
fit perspective (234)
assumes that a firms culture must fit with its business or strategic context
adaptive perspective (235)
assumes that the most effective cultures help organizations anticipate and adapt to environmental changes
organization (238)
is a system of consciously coordinated activities or forces of two or more people
three types of organizations (238)
for-profit organizations
nonprofit organizations-hospitals, colleges
mutual-benefit organization- union, trade associations
organization chart (239)
a box-and-lines illustration showing the formal lines of authority and the firm’s official position or work specialization
vertical hierarchy (239)
a formal vertical hierarchy shows the official communication network, who talks to who
horizontal specialization (240)
different jobs or work specialization
common elements of organizations (241)
common purpose,coordinated effort, division of labor, hierarchy of authority
common purpose (241)
unifies employees or members and gives everyone an understanding of the organizations reason for being
coordinated effort (241)
the coordination of individual efforts into group of organization wide effort
division of labor (241)
work specialization
the arrangement of having a discreet parts of a task done by different people
hierarchy of authority (241)
chain of command
is a control mechanism for making sure the right people do the right things at the right time
unity of command (241)
an employee should report to no more then one manager in order to avoid conflicting priorities and demands
span of control (242)
span of management
the number of people reporting directly to a given manager, narrow span of control means a manager has a limited number of people reporting, a firm is tall when there are many levels with narrow span of control, a wide span of control is a manager who has several people reporting, flat when there are only a few levels with wide span of control
authority (242)
the rights inherent in managerial position to make decisions, give orders, and utilize resources
accountability (242)
managers must report and justify work results to the managers above them
responsibility (242)
the obligation you have to preform the tasks assigned to you
delegation (243)
the process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy
line managers (243)
have authority to make decisions and usually have people reporting to them
staff personnel (243)
have authority functions, they provide advice, recommendations and research to the line managers
centralized authority (243)
important decisions are made by higher level managers, advantages is that there is less duplication of work , and procedures are uniform thus easier to control
decentralized authority (243)
important decisions are made by middle-level and supervisory-level managers, decisions are made more quickly increasing flexibility
organizational design (244)
concerned with designing the optimal structures of accountability and responsibility that an organization uses to execute its strategies
simple structure (244)
has authority centralized in a single person a flat hierarchy few rules and low work specialization, small mom-n-pop shops,landscaping
functional structures (244)
people with similar occupational specialties are put together in formal groups
divisional structure (245)
people with diverse occupational specialties are put together in formal groups by similar products or services, customers or clients, or geographic region
product division (245)
group activities around similar products or services
customer divisions (245)
tend to group activities around customer or clients
geographic division (245)
group activities around defined regional locations
matrix structure (245)
an organization combines functional and divisional chains of command in a grid so that there are two command structures, vertical and horizontal
horizontal design (246)
teams or work-groups, permanent or temporary, used to improve collaboration and work on shared tasks by breaking down international boundaries
cross-functional teams (247)
when managers from different functional divisions are brought together in teams to solve particular problems
boundary-less organization (249)
a fluid, highly adaptive organization whose members linked by information technology, come together to collaborate on common tasks, the collaborators may include co-workers, suppliers, customers and even competitors
hollow structure (249)
network structure
the organization has a central core of key functions and outsources the other functions to vendors who can do them cheaper or faster, information technology is the glue of this structure
modular structure (250)
a firm assembles product chunks or modules provided by outside contractors
virtual organization (250)
a firm whose members are geographically far apart, usually working through e-mail, collaborative computing and other computer connections
virtual structure (250)
a company outside a company that is created specifically to respond to an exceptional market opportunity that is often temporary
contingency design (251)
the process of fitting the organization to its environment, factors that must be considered ; environment, life cycle, link between strategy and structure
mechanistic organization (252)
authority is centralized, tasks and rules are clearly specified, employees are closely supervised, works best for companies with a stable environment, McDonald’s
organic organization (252)
authority is decentralized there are fewer rules and procedures, and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks, they are sometimes called adhocracies because they improvise as they go along, it is a “loose structure”
differentiation (253)
the tendency of the parts of an organization to disperse and fragment, all parts specialize so there is little coordination
integration (253)
the tendency of the parts of an organization to draw together to achieve a common purpose, frequent communication and coordination of parts
organizational life cycle (253)
has a natural sequence of stages, birth, youth, mid-life, maturity
birth stage (253)
stage one, non-bureaucratic, the stage which an organization is created
youth stage (253)
stage 2, per-bureaucratic, stage of growth and expansion
mid-life stage (253)
stage 3, bureaucratic, a period of growth evolving into stability
maturity stage (254)
stage 4, very bureaucratic, large and mechanistic, the danger is lack flexibility and innovation